1. Welcome to Euro Shorts, a short briefing on some of the week’s developments in
the financial services industry in Europe.
If you would like to discuss any of the points we raise below, please contact me or
one of our other lawyers.
Claire Cummings
020 7585 1406
claire.cummings@cummingslaw.com
www.cummingslaw.com
How to start and build a fund
At a seminar this week, Claire Cummings joined Johnny Moulsdale of Rees
Pollock and Nancy King of Portman Compliance to give a short talk on the
basic UK and offshore steps for starting and building a fund manager and
fund. A short video of all the talks will be made available next week on
CLTV
(Cummings
Law
Television,
which
is
found
at
https://vimeo.com/cummingslaw).
EU – US free trade agreement
The hopes of Michel Barnier, the EU Internal Market Commissioner, to
finalise the Transatlantic Trade and Investment Partnership (an EU-US free
trade agreement) by the end of the year may not come to fruition. Mr
Barnier has warned that negotiations may be halted unless a common
approach on regulation can be agreed, including mutual recognition of each
other's rules.
London calling?
A provider of deepwater oil drilling rigs is moving headquarters from Baar
to London and is believed to be one of a number of businesses attracted by
London’s talented workforce, easy airline connections from Heathrow, and
declining corporate taxes. A senior adviser at investment bank Evercore

2. Partners in London has been quoted as saying “There is definitely a swing
back to the UK under way, and I think there will be more. There are huge
advantages: You have a vast talent pool, infrastructure, language, and
lowered tax rates.” The UK’s base corporate tax rate is 23%, down from
28% in 2010 and will fall again, to about 20%, in 2015. This compares
roughly with reported rates of 29% in Germany and about 3% in France.
London’s FX calling industry also calling?
At the same time, the UK is reported as rising to the challenge in forextrading regulation and coping with increasingly more foreign companies
offering currency trading in Britain, while they are subject to regulation only
by their home country.
FCA and the future of the industry
Martin Wheatley, FCA Chief Executive, has given a speech on shaping the
future in asset management in which he called for greater transparency in
asset management to boost its reputation, and an open discussion on how
and where dealing commission is spent. He also commented on: (i)
regulations, saying that the FCA will be working with asset managers in the
UK and policy makers in Europe to find a balanced regulatory solution; (ii)
conflicts of interests, stating that the FCA will conduct a thematic review
following up on previous work; and (iii) examining bundled brokerage
arrangements and looking at buy-side and sell-side practices. He confirmed
that the FCA plans to publish a consultation paper in November seeking
views on how to improve the use of dealing commissions and focusing on
providing clarity around how "research" is defined, and what the FCA
considers to be eligible and non-eligible when purchasing goods and
services from clients' dealing commissions.
AIFMD passporting
The FCA has published new Q&A webpages on the AIFMD passporting
process. The webpages are: (i) Q&A relating to full scope AIFMs managing
authorised AIFs; (ii) Q&A for full-scope AIFMs; (iii) Q&A for full scope
UK AIFMs marketing AIFs; and (iv) general information.

3. ESMA
RTS ESMA has published a list of responses to its July discussion paper on
its draft RTS under CRA III Regulation. Respondents include the
Association for Financial Markets in Europe and number of credit rating
agencies.
Details
can
be
found
on
http://www.esma.europa.eu/consultation/Discussion-Paper-CRA3Implementation#responses
EMIR
The FCA has published two factsheets relating to EMIR and the Regulation
on OTC derivatives, central counterparties and trade repositories. The first is
a factsheet for financial counterparties (FCs) subject to the EMIR
requirements for timely confirmation and bilateral risk mitigation and
summarises the FCA’s findings from discussions it held with FCs this
summer to identify challenges for market compliance with the timely
confirmation and bilateral risk mitigation requirements for OTC derivative
contracts under EMIR. The second factsheet is for those non-financial
counterparties (NFCs) which are subject to EMIR and gives information on
a review by the FCA into how NFCs have been defining their hedging
activity and monitoring their status against the clearing threshold. This
factsheet also discusses certain challenges of complying with EMIR.
Italy - Amended decree on FTT
The Italian Ministry of Economy and Finance has approved a decree ('the
New Decree') clarifying important aspects of the application of the FTT on
derivatives and equities. No amendments or clarifications are provided with
respect to the additional levy which applies to “high frequency trading”.
This decree was published in the Italian Official Gazette on 20 September
2013 and entered into force on 5 October 2013, other than provisions on
non-capital protected bonds and debt instruments (including non-capital
protected structured notes) which come into force on 1 January 2014.
Spain - tax rates for non-residents
Spain's draft 2014 Budget extends the application of increased tax rates on
Spanish source income derived by non-Spanish residents with no permanent
establishment in Spain. General tax will continue at 24.75%, and tax on
dividends and interest will be fixed at 21% and capital gains will continue to
be taxed at a 21% tax rate.

4. GUEST SHORTS
This week, Wall Street attorney Stephen A. Bornstein reports on the FCA's
recent announcement regarding the warning of investors about targets of
ongoing securities fraud investigations:
“Until now, the UK’s financial regulator publicly revealed the identities of
alleged securities violators only after it had made the decision to impose a
penalty or initiate a proceeding. The newly-established Financial Conduct
Authority, however, has just announced that it intends to publicly disclose
warnings sent to suspected wrongdoers – firms and individuals — that they
can expect enforcement actions against them. The purpose of the new
initiative is to put investors on notice of putative fraud so as to prevent any
further harm. Targets apparently would be given the opportunity before their
warnings are published to persuade the FCA that publication would be
unfair. According to one UK legal observer, “the FCA … knows that the
crowd only gathers when there is a body in the stocks.”
Stephen's law practice is described at www.wallstreetcounsel.com and his
blog posts on legal and regulatory developments in the global financial
services industry appear at www.aroundwallstreet.com.
Cummings
Tel: + 44 20 7585 1406
Mob: + 44 7734 057 327
www.cummingslaw.com
1 November 2013